TMI Blog2013 (5) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, following the order of M/s Godrej Agrovet Ltd [2010 (9) TMI 291 - ITAT, MUMBAI] AO directed to restrict the disallowance on account of administrative expenditure u/s 14A to 2% of the total exempt income. As regards the addition of the amount of disallowance, as computed u/s 14A while computing the book profit u/s 115JB is concerned, this Tribunal in the case of Goetze (India) Ltd (2009 (5) TMI 615 - ITAT DELHI ) has held that for computation of adjusted book profit, the provisions of sec.14A cannot be imported into clause (f) of the Explanation to sec. 115JB. Also see case M/s Bengal Finance & Investments P Ltd (2013 (5) TMI 117 - ITAT MUMBAI) where it is clear that the amount disallowed u/s 14A cannot be considered while computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee failed to bring anything on record to substantiate their claim of not incurring expenditure in earning the exempt income. Accordingly, the Assessing Officer made disallowance u/s 14A on account of administrative expenses in the ratio of the total income to exempt income. The Assessing Officer worked out the disallowance at Rs. 58,38,117/- for the AY 2005-06 and Rs. 33,29,753/- for the Assessment Year 2006-07 respectively. 3.1 A similar disallowance was made while computing the book profit u/s 115JB. 3.2 The assessee challenged the action of the Assessing Officer before the CIT(A). The CIT(A) while passing the impugned order has modified the amount of disallowance u/s 14A by applying Rule 8D of the I T Rules and accordingly, the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A. Therefore, even the assessee has not shown any specific expenditure in the books of account; the expenditure incurred for both exempt as well as taxable income has to be apportioned. He has relied upon the orders of the authorities below. 6 As regards the adjustment on account of the expenditure incurred for exempt income for the purpose of computation of book profit u/s 115JB, the ld AR has submitted that the principles of apportionment provided under sec.14A cannot be imported for the computation of book profit u/s 115JB. He has relied upon the following decisions:- i) Goetze (India) Ltd. 32 SOT 101(Del) ii)M/s Bengal Finance Investments P Ltd ITA No.5620/M/2010 dt 31.7.2012 iii)M/s Essar Teleholding Ltd ITA No.3850/Mum/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld AR on this issue. 7.1 In the case of M/s Godrej Agrovet Ltd (supra), the coordinate Bench of this Tribunal vide order dated 17.9.2010( one of us, Judicial Member is the party to the same), has considered and decided an identical issue in para 10 as under:- "10. As regards the issue relating to the disallowance out of common administrative expenses u/s 14A raised in ground No. 8, it is observed that this disallowance made by the A.O. at 28,35,440/- on pro-rata basis was restricted by the ld. CIT(A) to 13,77,000/- by applying Rule 8D of Income Tax Rules, 1962. As held by the Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. (ITA No. 626 of 2010 dtd. 12.08.2010), Rule 8D of the Income Tax Rules 1962 is applicable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en taken by the Tribunal in the case M/s Bengal Finance Investments P Ltd (supra) in para 5 as under:- "5.We have heard the rival submissions and perused the relevant material on record. It is observed that the Assessing Officer added the amount disallowed by him u/s 14A to the tune of Rs.Rs.78.84 lakh to the book profit computed u/s 115JB. The learned CIT(A) ordered for the deletion of this amount. The learned AR has placed on record a copy of the order passed by the Mumbai Bench of the Tribunal in the case of M/s.Essar Teleholdings Ltd. v. DCIT in ITA No.3850/Mum/2010 in which it has been held that the amount disallowed u/s 14A cannot be added to the amount of book profit u/s 115JB. In this order it has been laid down that unless a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A to be considered while computing the book profit u/s 115JB has not been discussed; but only in the concluding para, while the Tribunal remanded the issue of disallowance u/s 14A has also made a passing reference as under:- "In case any amount is disallowed u/s 14A, we make it clear that the amount also has to be disallowed under the provisions of sec. 115JB" 8.4 Since the issue has been adjudicated after an elaborate discussion by the Tribunal in various decisions referred above; therefore, respectfully following the decisions, as relied upon by the ld AR, we decide this issue in favour of the assessee and against the revenue. 9 In the result, the appeal filed by the assessee is partly allowed. Order Pronouncement in the Open Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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